Year-end report
For the period January–December 2012 • February 15, 2013, 2.00 pm
The fourth quarter of 2012
Compared to the third quarter of 2012
•Net operating profit amounted to EUR 14.5 M (-0.5). Of this, EUR 13.8 M was proceeds from
the divestment of the Bank’s Swedish subsidiary, which had been emptied of operations.
• Profit for the period attributable to shareholders was EUR 14.9 M (-0.3).
• Net interest income decreased by 3 per cent to EUR 9.9 M (10.2).
• Net commission income increased by 20 per cent to EUR 9.2 M (7.7).
• Total expenses increased by 17 per cent to EUR 25.2 M (21.5).
• Net loan losses were EUR 3.1 M (1.0), including EUR 2.0 M in group impairment losses for
the shipping industry.
• Earnings per share amounted to EUR 1.03 (-0.02).
January−December 2012
Compared to January−December 2011
•Net operating profit amounted to EUR 10.0 M (-5.7).
Net operating profit
EUR M
15
9
3
-2
-8
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Deposits and lending
EUR M
3,000
2,861
2,737
2,762
2,544
2,551
2,591
2,557
2,447
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
2,500
2,895 2,906
2,000
• Profit for the period attributable to shareholders was EUR 11.6 M (-6.5).
• Net interest income decreased by 4 per cent to EUR 41.2 M (43.1).
1,500
• Net commission income decreased by 16 per cent to EUR 32.7 M (38.7).
• Deposits • Lending
• Total expenses decreased by 9 per cent to EUR 94.0 M (103.1).
• Net loan losses were EUR 6.4 M (1.8), equivalent to a loan loss level of 0.22 (0.07) per cent.
• Return on equity after taxes (ROE) amounted to 6.4 per cent (-3.9).
• Earnings per share amounted to EUR 0.80 (-0.54).
• The Tier 1 capital ratio increased to 10.9 per cent (8.4).
• The Board of Directors proposes a dividend of EUR 0.15 (0.00) per share.
• The Bank’s earnings performance is determined to a significant degree by external factors
that are difficult to predict. Since new securities legislation removes the explicit obligation
in an interim report to provide an account of probable developments during the current
financial period, the Bank of Åland is henceforth choosing to refrain from providing
earnings forecasts in interim reports. In accordance with legislative requirements, the
future outlook is presented in the Bank’s Annual Report.
.
“The fourth quarter was strong in terms of earnings, mainly due to income from the d
­ ivestment
of the Swedish subsidiary, which had been emptied of operations. At the quarterly level, however, we can also see that our measures to improve profitability are beginning to have an impact.
Yet the conditions for conducting banking operations in the euro zone remain challenging,
although there are signs of increased optimism both in the stock market and the fixed income
market. The significant cost increases affecting banks because of new legislation and expanded
regulatory requirements will be passed on to customers. This will lead to a continued rise in
­margins, especially on lending.”
Peter Wiklöf, Managing Director
Tier 1 capital ratio
Per cent
12
9
6
3
0
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q3 12
Q4 12
Managed assets
EUR M
5,000
4,000
3,000
2,000
1,000
0
Q4 11
Q1 12
Q2 12
The Bank of Åland is a bank with strong customer relationships and personal service. The Bank has extensive financial investment expertise
and at the same time can offer good financing services. The commercial bank was founded in 1919 and has been listed on the Nasdaq OMX Helsinki Oy
(Helsinki Stock Exchange) since 1942. The Bank of Åland’s Head Office is in Mariehamn. The Bank has eight offices in the Åland Islands and seven offices
elsewhere in Finland. The Bank has three offices in Sweden. A total of seven subsidiaries, whose operations are connected in various ways to banking,
belong to the Bank of Åland Group.
Bank of Åland Plc. Registered office: Mariehamn Address: Nygatan 2, FI-22100 Mariehamn, Åland, Finland
Business Identity Code: 0145019-3. Telephone: +358 204 29 011. Website: www.alandsbanken.fi
Earnings and profitability
MACRO SITUATION AND REGULATORY REQUIREMENTS
The euro zone debt crisis has dominated economic developments
during 2012. The 3-month Euribor benchmark interest rate fell from
1.34 per cent to a record-low 0.19 per cent in one year. Since the
3-month Euribor determines a large proportion of customer lending
rates, while the Bank’s borrowing cost is not at all affected to the
same extent by lower benchmark interest rates, this squeezes the
Bank’s net interest income. Regulatory requirements such as higher
capital adequacy ratios, larger liquidity buffers, longer maturity on
borrowings and increased administration for risk management and
reporting also squeeze profitability – the latter especially in small
banks. The estimated total additional cost of the new regulatory
requirements is equivalent to a 0.6-1.0 percentage point increase in
lending rates. Finland has also introduced a banking tax amounting
to 0.125 per cent of risk-weighted assets, which further increases
the Bank’s lending costs starting in 2013. The Bank of Åland, like
other banks, thus needs to raise its margins. During the latest
period, we have seen a clear tendency towards higher lending
margins in Finland. We expect lending margins to rise significantly
from their current levels.
BENCHMARK INTEREST R ATES, AVER AGES, PER CENT
Euribor 3 mo
Euribor 12 mo
Stibor 3 mo
Stibor 12 mo
Euribor 3 mo
Euribor 12 mo
Stibor 3 mo
Stibor 12 mo
Q4 2012
Q3 2012
Q4 2011
0.19
0.60
1.45
1.78
0.36
0.89
1.95
2.40
1.50
2.05
2.61
2.80
2012
2011
0.57
1.11
2.00
2.40
1.39
2.01
2.46
2.85
During 2012, the value of the Swedish krona in relation to the euro
averaged 4 per cent higher than during the equivalent period of
2011. Compared to its year-end 2011 position, the krona appreciated
more than 4 per cent. This represents a strong krona in historical terms. When translating the income statement of the Bank of
Åland’s Swedish operations to euros, average exchange rates for
the period are used, while the balance sheet is translated at the
exchange rate prevailing on the closing day.
IMPORTANT EVENTS
During 2012, the Bank of Åland completed the restructuring of its
operations in Sweden, which means that Swedish operations are
now being pursued in the form of the Swedish branch of the parent
Bank. This new, simplified corporate structure means more efficient
capital utilisation and a more efficient tax situation, as well as more
cost-effective corporate governance. During the fourth quarter, the
Bank completed the divestment of its Swedish subsidiary, which
had been emptied of operations, with a positive impact on earnings
of EUR 13.8 M.
During 2012, for the first time in its history the Bank of Åland
received a credit rating. The Bank received a BBB/A-3, i.e. investment grade credit rating with a stable outlook for its long-term and
short-term borrowing from the rating agency Standard & Poor’s.
The Bank’s covered bonds received an AA credit rating from Standard & Poor’s.
During the third quarter, the Bank of Åland issued covered bonds
for the first time, totalling EUR 300 M. During the fourth quarter,
the Bank issued more than EUR 170 M worth of additional covered
bonds, this time in Swedish kronor and mainly to Swedish investors. Covered bonds have provided the Bank of Åland with access
to a new, efficient funding source. The covered bond market is
liquid and is the portion of the capital market that has functioned
best throughout the financial crisis. The interest cost is substantially lower than for non-covered bonds. By issuing covered bonds,
the Bank of Åland increases its long-term funding as a share
of total funding, which is in line with the new capital adequacy
regulations.
During 2012, the Bank implemented a significant reorganisation
and extensive efficiency-raising measures. During the first quarter,
the number of positions in the Group was reduced by about 50, of
which 30 in the Åland Islands, 10 on the Finnish mainland and 10 in
Sweden. During the fourth quarter, the number of positions in the
Group was further reduced by more than 30, of which about 20 in
the subsidiary Crosskey Banking Solutions. The number of offices in
Åland was reduced from 16 to eight plus two representative offices.
On the Finnish mainland, institutional equities trading operations
were closed. Extensive changes occurred in the corporate units of
the Group.
During the first quarter of 2012, the Finnish Financial Supervisory
Authority approved the Bank’s application to be allowed to calculate the capital requirement for credit risk according to the Internal
Ratings Based (IRB) approach for the Finnish household portfolio.
The transition from the standardised approach to the IRB approach
for the Finnish household portfolio temporarily reduced the
Bank’s risk-weighed assets by EUR 355 M. The Bank is continuing
its efforts to implement the IRB approach in the Finnish corporate
portfolio and the Swedish loan portfolio as well.
The Bank of Åland received the 2012 Morningstar Funds Award as
the best fixed interest fund manager in Finland. The Bank earned
the award for its three euro-denominated fixed income funds:
Ålandsbanken Cash Manager, a short-term fixed income fund;
Ålandsbanken Euro Bond, a medium-term fixed income fund; and
Ålandsbanken Euro High Yield, a fixed income fund with higher
potential return and risk than traditional fixed income funds.
On April 19, 2012, the Annual General Meeting elected Folke Husell,
Anders Å Karlsson and Annika Wijkström as new members of
the Bank’s Board of Directors. Board members Kaj-Gustaf Bergh,
Agneta Karlsson and Anders Wiklöf were re-elected. At the statutory meeting of the Board the same day, Kaj-Gustaf Bergh was
elected Chairman and Folke Husell was elected Vice Chairman of
the Board.
EARNINGS FOR THE FOURTH QUARTER OF 2012
Net operating profit in the fourth quarter amounted to EUR 14.5 M,
compared to EUR -0.5 M in the third quarter. The main explanation
for these very good quarterly earnings was the divestment of the
Bank’s Swedish subsidiary, which had been emptied of operations.
This divestment resulted in income of EUR 13.8 M, of which EUR
6.3 M was a capital gain and EUR 7.5 M a currency translation gain.
Bank of Åland Plc Year-end Report, January–December 2012 2
At the same time, nonrecurring expenses in the range of EUR 3.2
M plus EUR 2.0 in group loss impairments for lending exposures
to the shipping industry were charged to fourth quarter earnings.
Earnings from underlying banking business developed favourably.
Total income amounted to EUR 42.7 M. Excluding the divestment
income from the Swedish subsidiary and the associated company Ålands Företagsbyrå, income amounted to EUR 27.9 M. This
was EUR 5.9 M or 26 per cent higher than the preceding quarter,
adjusted for the impairment loss on the Bank’s shareholding in the
equities-trading platform Burgundy. The Bank was able to offset
the effects of falling benchmark interest rates by adjusting its lending prices. Overall net interest income decreased by EUR 0.3 M or 3
per cent from the preceding quarter to EUR 9.9 M. Net commission
income increased by EUR 1.5 M or 20 per cent to EUR 9.2 M due to
higher securities brokerage commissions and asset management
commissions.
Total expenses were EUR 25.2 M, which was EUR 3.7 M or 17 per
cent higher than in the second quarter. In addition to seasonal variations, EUR 1.1 M in expenses related to staff cutbacks, EUR 0.5 M
in administrative expenses for problem loans, EUR 1.0 M in impairment losses and conversion expenses for IT systems, EUR 0.3 M in
expenses related to phasing out surplus premises and EUR 0.3 M in
other expenses were noted.
Loan losses increased to EUR 3.1 M (1.0), of which EUR 2.0 M was
related to increased group impairment losses for exposures to the
shipping industry. These increased group impairment losses were
recognised because there was another downturn in economic
conditions at the end of 2012, which will affect the export sector
and thus also shipping. Even though the Bank’s customers have
demonstrated an ability to weather bad times, a continued and
deepened economic slowdown increases risks. The Bank’s customers in the shipping industry have already experienced two years of
weak market conditions.
Profit for the period attributable to shareholders was EUR 14.9 M
(-0.3).
Return on equity after taxes amounted to 33.3 (-0.4) per cent.
EARNINGS FOR JANUARY-DECEMBER 2012
Net operating profit in 2012 amounted to EUR 10.0 M, compared
to EUR -5.7 M in the preceding year. Both 2012 and 2011 earnings
included a number of nonrecurring items related to the restructuring of operations. The most significant items were EUR 13.8
M in income from the divestment of the Bank’s Swedish subsidiary, which had been emptied of operations, a capital gain of EUR
1.0 M from the divestment of the associated company Ålands
Företagsbyrå, plus impairment losses of EUR 0.8 M in 2012 and
EUR 1.1 M in 2011 on the Bank’s shareholding in the equities-trading
platform Burgundy and restructuring expenses of EUR 1.1 M in 2012
and EUR 5.7 M in 2011 related to staff cutbacks. Excluding these
nonrecurring items, net operating profit decreased from EUR 1.1 M
to EUR -2.9 M in 2012. However, thanks to the measures that were
undertaken, the trend of earnings before loan losses and nonrecurring items turned upward during the second half of 2012. Earnings
bottomed out in the second quarter of 2012, when quarterly profit
before loan losses and nonrecurring items was EUR -1.4 M. In the
third quarter, this measure of earnings increased to EUR 1.3 M. In
the fourth quarter it improved further to EUR 3.9 M.
Total income increased by EUR 11.2 M or 11 per cent to EUR 110.4 M
(99.2). Of this increase, EUR 15.0 M was explained by the abovementioned nonrecurring items.
Because of price adjustments in the lending portfolio and higher
volume, the Bank was largely able to offset the negative impact of
sharply falling money market interest rates on net interest income.
Net interest income fell by EUR 1.9 M or 4 per cent to EUR 41.2 M.
In the Sweden business area, net interest income increased by EUR
2.3 M or 25 per cent.
Net commission income fell by EUR 6.0 M or 16 per cent to EUR
32.7 M. Of this decrease, EUR 6.4 M was attributable to securities brokerage income, among other things due to the closure of
institutional equities trading operations, which had income of EUR
2.2 M in 2011.
Net income from securities transactions and foreign exchange dealing amounted to EUR 10.1 M, compared to EUR 1.9 M in 2011. The
increase consisted mainly of foreign exchange gains related to the
divestment of the Bank’s Swedish subsidiary. Underlying earnings
from financial asset management also developed favourably.
Net income from financial assets available for sale increased to
EUR 10.8 M (-0.7). EUR 6.3 M in capital gains on the divestment of
the Bank’s Swedish subsidiary and EUR 1.0 M on the divestment of
Ålands Företagsbyrå were the most important explanations for the
increase, but underlying earnings from financial asset management
also increased strongly.
Net income from investment properties was EUR 0.0 M. In 2011 this
item amounted to EUR 0.9 M, of which EUR 0.8 M was related to a
divestment gain.
Information technology (IT) income from Crosskey’s operations
increased by EUR 1.1 M or 8 per cent to EUR 14.5 M (13.4).
Total expenses fell by EUR 9.1 M or 9 per cent and amounted to EUR
94.0 M (103.1). Adjusted for restructuring expenses related to staff
cutbacks both in 2012 and 2011, this was a decrease of EUR 4.4 M.
Adjusted for exchange rate effects, the decrease was EUR 5.7 M or
6 per cent. The Bank of Åland previously announced cost savings
in the range of EUR 10 M annually from the measures undertaken
during 2011 and 2012. Of these, EUR 4 M was related to the closure
of institutional equities trading in Sweden in June 2011, while EUR
4 M was related to the reorganisation that was implemented in
the first quarter of 2012 and approximately EUR 2 M was related to
the measures implemented in the fourth quarter of 2012. Savings
targets have been achieved by a wide margin. Expenses recognised for the full year 2012 were more than EUR 5 M lower than for
the full year 2011 due to these measures, of which EUR 2 M was
attributable to a full rather than a half year without institutional
equities trading in Sweden and more than EUR 3 M was attributable to measures in 2012 totalling EUR 6 M. All else being equal,
full year 2013 expenses will be about EUR 3 M lower than full year
2012 expenses due to these measures.
Net loan losses were EUR 6.4 M (1.8). Of impairment losses, EUR
2.0 M consisted of group impairment losses for exposures to the
shipping industry. The loan loss level was 0.22 per cent, compared
to 0.07 per cent the preceding year.
The tax effect was positive and amounted to EUR 2.2 M (0.4).
The favourable tax situation is explained primarily by tax-exempt
capital gains, while it was possible to reverse certain deferred
tax liabilities. The tax situation also improved because Swedish
operations now take place in the form of a branch of the Parent
Company. In addition, Finnish corporate tax has been lowered from
26 to 24.5 per cent.
Bank of Åland Plc Year-end Report, January–December 2012 3
Profit for the year attributable to shareholders was EUR 11.6 M,
compared to EUR -6.5 M in the preceding year.
Return on equity after taxes was 6.4 per cent (-3.9).
Net operating profit deteriorated in the Åland and Finnish Mainland
business areas as well as in Crosskey Banking Solutions. Earnings
in the Sweden business area improved. The effects on the consolidated financial statements of the divestment of the Swedish subsidiary are reported as part of the Sweden business area. Business
operations in the Sweden business area also substantially improved
their earnings. Expenses decreased throughout all business areas
due to efficiency-raising measures. Net interest income in the
Åland business area decreased by 18 per cent due to lower Euribor
rates, while EUR 3.6 M in impairment losses mainly connected to
shipping loans and about EUR 0.7 M in expenses for administration
of these loans was charged to earnings. Net interest income in the
Finnish Mainland business area also fell sharply as a consequence
of lower Euribor rates. Compared to the preceding year, the business area did not include the closed-down Equities operations.
Aside from lower net interest income, the lower net operating
profit in the Finnish Mainland business area was also due to lower
earnings at Ålandsbanken Asset Management. The improvement in
the earnings of the Sweden business area primarily arose by means
of cost reductions.
BUSINESS VOLUME
Managed assets increased by EUR 478 M or 13 per cent during
2012 and amounted to EUR 4,292 M (3,814). Managed assets in
the Bank of Åland Group’s own mutual funds rose by EUR 110 M or
15 per cent during 2012 to EUR 867 M (757). Assets under discretionary management rose by EUR 194 M or 11 per cent to EUR
1,991 M (1,798), which was the highest figure ever. Assets under
advisory management rose by EUR 173 M or 14 per cent to EUR
1,433 M (1,260). Of total managed assets, the Sweden business area
accounted for EUR 2,424 M or 56 (57) per cent.
Deposits from the public – including certificates of deposit, index
bonds and debentures issued to retail customers – decreased by
EUR 97 M during 2012 and amounted to EUR 2,447 M (2,544).
Because of the Bank’s successful covered bond issues, these bonds
have partly replaced more expensive time deposits. In Sweden, the
Åland Account continued to attract new customers. During 2012,
Åland Account and fixed interest rate deposits increased by about
EUR 100 M.
Lending to the public totalled EUR 2,906 M (2,737). This represented an increase of EUR 169 M or 6 per cent. The lending
increase was primarily related to home mortgage loans in the
Swedish market.
CREDIT QUALIT Y
Lending to private individuals comprises nearly two thirds of
the loan portfolio. Home mortgage loans account for about two
thirds of lending to private individuals. Loans for the purchase of
securities, with market-listed securities as collateral, comprise the
second-largest type of lending to private individuals. Loan-to-value
ratios are conservative. Historically, the Bank of Åland has never
had any substantial loan losses on this type of lending. The corporate portfolio has a close affinity with the household portfolio,
since many of the companies are owned by customers who, as
individuals, are also Private Banking customers.
During 2012, gross non-performing loans (more than 90 days)
decreased by EUR 0.7 M to EUR 18.6 M (19.3). As a share of lending to the public, non-performing loans fell from 0.70 per cent to
0.64 per cent during the year. The level of provisions for doubtful
receivables, i.e. individual impairment losses as a proportion of
all doubtful receivables, was 84 per cent compared to 62 per cent
at year-end 2011. Including group impairment losses, the level of
provisions amounted to 108 per cent, compared to 71 per cent at
year-end 2011. The Bank of Åland Group had EUR 13.6 M in impairment loss provisions, including individual impairments of EUR 10.6
M and group impairment losses of EUR 3.1 M.
LIQUIDIT Y AND BORROWING
The Bank of Åland’s liquidity reserve in the form of cash, account
balances and investments with other banks, liquid interest-bearing
securities plus holdings of unencumbered covered bonds issued
by the Bank amounted to EUR 483 M (410) on December 31, 2012.
This was equivalent to 13 per cent of total assets (12) and 17 (15) per
cent of lending to the public. Given the Bank’s ability to issue highquality covered bonds, there is an additional unutilised liquidity
reserve.
The Bank has no significant long-term borrowing maturities during
2013.
Seventy-four per cent of the Bank of Åland’s funding comes from
deposits from the public, including certificates of deposit, index
bonds and subordinated debentures. The Bank of Åland thus
has a relatively small need for borrowing in the capital market.
Of deposits from the public, EUR 140 M (155) consisted of time
deposits, index bonds and debentures with a maturity of more than
one year. Although the remainder consisted of sight deposits or has
contractually shorter maturities than 1 year, this funding can largely
be regarded as stable, based on historical customer behaviour.
The Bank of Åland’s core funding ratio, defined as lending to the
public divided by deposits from the public including certificates of
deposit, index bonds and subordinated debentures issued to the
public, plus covered bonds issued, amounted to 104 per cent at the
end of 2012 (108).
CAPITAL ADEQUACY
Equity capital increased in the amount of total profit for the period,
EUR 5.6 M, to EUR 186 M. The equity/assets ratio decreased to 5.1
per cent from a 5.3 per cent position at the end of 2011.
Core Tier 1 capital as defined in capital adequacy regulations
amounted to EUR 152.9 M (145.5).
During the first quarter of 2012, the Finnish Financial Supervisory
Authority approved the Bank’s application to be allowed to calculate the capital requirement for credit risk according to the Internal
Ratings Based (IRB) approach for the Finnish household portfolio.
Risk-weighted assets decreased by EUR 327 M or 19 per cent during
2012 and amounted to EUR 1,402 M (1,729). Risk-weighted assets
attributable to credit risks decreased by EUR 311 M or 20 per cent
despite the increase in lending, since the IRB approach is being
used instead of the standardised approach for the Finnish household portfolio.
The core Tier 1 capital ratio increased to 10.9 (8.4) per cent, without
taking transitional rules into account. Since the Bank of Åland has
no hybrid capital, its core Tier 1 capital ratio is the same as its Tier 1
capital ratio. The total capital ratio was 16.1 (12.8) per cent.
In accordance with the 2011 Annual General Meeting’s decision on
Bank of Åland Plc Year-end Report, January–December 2012 4
purchases of the Bank’s own shares for the purpose of implementing a share-based compensation programme for senior executives,
the Bank has purchased its own shares. On December 31, 2012 this
holding amounted to 25,000 Series B shares.
CHANGES IN GROUP STRUCTURE
During the fourth quarter, the Bank of Åland Plc completed its
divestment of the wholly owned subsidiary Ålandsbanken Asset
Management AB in Sweden. It also completed its merger with the
wholly owned subsidiary Ålandsbanken Equities Research Ab. Both
of these companies were emptied of business operations. During
the fourth quarter, the Bank also sold its shares in the associated
company Ålands Företagsbyrå Ab.
DIVIDEND
In light of positive earnings attributable to the shareholders, the
improved capital adequacy situation and a positive belief in the
Bank’s trend of earnings and capital generating capacity, the Board
of Directors proposes that the Annual General Meeting approve the
payment of a dividend of EUR 0.15 per share, equivalent to a total
amount of EUR 2.2 M.
The poorer economic outlook has adversely affected the shipping
industry, among others. The risk of loan losses from this industry
is thus high. We are focusing especially on these customers. The
Bank of Åland’s total lending to companies in the shipping industry
represents about 3 per cent of its overall lending volume.
Based on the positive future expectations at Compass Card, a
deferred tax asset of EUR 0.9 M was recognised. If the conditions
affecting the company should change dramatically, in such a way
that the company will not achieve a profit, the value of this asset
may need to be re-assessed.
FUTURE OUTLOOK
The Bank’s earnings performance is determined to a significant
degree by external factors that are difficult to predict. Since new
securities legislation removes the explicit obligation in an interim
report to provide an account of probable developments during the
current financial period, the Bank of Åland is henceforth choosing
to refrain from providing earnings forecasts in interim reports. In
accordance with legislative requirements, the future outlook is
presented in the Bank’s Annual Report.
IMPORTANT EVENTS AFTER THE CLOSE OF THE
REPORT PERIOD
GENER AL MEETINGS
In January, the Bank of Åland issued EUR 100 M worth of covered
bonds with a 10-year maturity.
An Extraordinary General Meeting will be held in Mariehamn on
Tuesday, March 5, 2013. The Annual General Meeting will be held in
Mariehamn on Thursday, April 18, 2013.
The Bank of Åland published a notice to convene an Extraordinary
General Meeting of shareholders in Mariehamn, Åland, Finland on
March 5. For the purpose of modernising the Articles of Association, the Board of Directors proposes that the Extraordinary General Meeting approve the removal of the regulation that a person
who has reached the age of 67 may not be elected as a Board
member.
The Annual Report will be published on Wednesday, March 20,
2013. The Corporate Governance Report is included in the Annual
Report.
FINANCIAL INFORMATION
The Interim Report for January–March 2013 will be published on
April 29, 2013.
RISKS AND UNCERTAINTIES
The Bank of Åland’s earnings are affected by external changes
that the Company itself cannot control. Among other things, the
Group’s trend of earnings is affected by macroeconomic changes
and changes in general interest rates, share prices and exchange
rates, along with higher expenses due to regulatory decisions and
directives as well as the competitive situation.
The Group aims at achieving operations with reasonable and carefully considered risks. The Group is exposed to credit risk, liquidity
risk, market risk, operational risk and business risk.
The Interim Report for January–June 2013 will be published on July
29, 2013.
The Interim Report for January–September 2013 will be published
on October 28, 2013.
The figures in this Year-end Report are unaudited.
Mariehamn, February 15, 2013
THE BOARD OF DIRECTORS
The Bank does not engage in trading for its own account.
The Bank of Åland has no exposure to the “GIIPS” countries
(Greece, Italy, Ireland, Portugal and Spain).
Bank of Åland Plc Year-end Report, January–December 2012 5
Financial summary
Q4
2012
Q3
2012
Income
Net interest income
Net commission income
Other income
Total income
9.9
9.2
23.6
42.7
10.2
7.7
4.1
22.0
Staff costs
Other expenses
Total expenses
-13.7
-11.5
-25.2
-12.3
-9.2
-21.5
Profit before loan losses etc.
17.5
0.5
Impairment losses on loans and other
­commitments
Net operating profit
-3.1
14.5
Income taxes
Profit for the report period
Attributable to:
Non-controlling interests
Shareholders in Bank of Åland Plc
Bank of Åland Group
%
Q4
2011
%
2012
2011
%
-18
11
86
41.2
32.7
36.5
110.4
43.1
38.7
17.4
99.2
-4
-16
94
12.1
8.3
2.6
23.0
11
26
17
-16.7
-12.6
-29.3
-18
-8
-14
-52.3
-41.7
-94.0
-60.0
-43.1
-103.1
-13
-3
-9
-6.3
16.4
-3.9
-1.0
-0.5
-0.8
-7.1
-6.4
10.0
-1.8
-5.7
0.6
15.1
0.3
-0.2
2.6
-4.5
-75
2.2
12.2
0.4
-5.3
0.2
14.9
0.2
-0.3
56
0.2
-4.7
32
0.6
11.6
1.2
-6.5
2,906
2,447
4,292
186
3,637
1,402
2,895
2,557
4,230
178
3,620
1,420
0
-4
1
5
0
-1
2,737
2,544
3,814
181
3,400
1,729
6
-4
13
3
7
-19
33.3
59
0.42
0.64
108
104
5.1
10.9
1.03
12.70
10.04
7.10
-0.4
98
0.14
0.86
67
106
4.9
9.7
-0.02
12.12
10.04
7.77
-11.4
127
0.12
0.70
71
108
5.3
8.4
-0.34
12.34
14.15
8.68
6.4
85
0.22
0.64
108
104
5.1
10.9
0.80
12.70
10.04
7.10
-3.9
104
0.07
0.70
71
108
5.3
8.4
-0.54
12.34
14.15
8.68
14,395
14,395
14,441
14,395
14,441
626
633
697
640
690
EUR M
Volume
Lending to the public
Deposits from the public 1
Managed assets
Equity capital
Balance sheet total
Risk-weighted assets
Financial ratios
Return on equity after taxes, % (ROE) 2
Expenses/income ratio, % 3
Loan loss level, % 4
Gross non-performing assets, % 5
Level of provisions for doubtful receivables, % 6
Core funding ratio, % 7
Equity/assets ratio, % 8
Core Tier 1 capital ratio, % 9
Earnings per share before dilution, % 10
Equity capital per share, EUR 11
Market price per Series A share, EUR
Market price per Series B share, EUR
Number of shares outstanding
(not own shares) thousands
Working hours re-calculated to full-time
equivalent positions
1
2
3
4
5
Deposits from the public and public sector entities, including bond loans
and ­certificates of deposit
(Profit for the report period attributable to shareholders / Average
shareholders’ ­portion of equity capital) x 100
Expenses / Income
Impairment losses on loan portfolio and other commitments / lending to
the public
(Non-performing loans more than 90 days) / lending to the public) x 100
-3
20
11
-47
Impairment loss provisions / doubtful receivables
Lending to the public / Deposits including certificates of deposit, index bonds and
debentures issued to the public and covered bonds issued
8
(Equity capital / Balance sheet total) x 100
9
(Core Tier 1 capital / Capital requirement) x 8 % x 100
10
Shareholders’ portion of earnings for the period/ Number of shares adjusted for
share issue
11
Equity capital/Number of shares on closing day
6
7
Bank of Åland Plc Year-end Report, January–December 2012 6
Summary statement of financial position
Bank of Åland Group
Dec 31, 2012
Dec 31, 2011
%
EUR M
Assets
Cash
Debt securities eligible for refinancing
with central banks
Claims on credit institutions
Claims on the public and public sector entities
Debt securities
Shares and participations
Shares and participations in associated companies
Derivative instruments
Intangible assets
Tangible assets
Other assets
Accrued income and prepayments
Deferred tax assets
Total assets
133
66
100
305
104
2,906
45
7
1
20
11
33
45
26
3
3,637
125
129
2,737
198
3
1
20
11
32
46
26
4
3,400
-20
6
-77
96
-37
0
-5
1
-3
1
-30
7
Liabilities and equity capital
Liabilities to credit institutions
Liabilities to the public and public sector entities
Debt securities issued
Derivative instruments
Other liabilities
Accrued expenses and prepaid income
Subordinated liabilities
Deferred tax liabilities
Total liabilities
375
2,127
760
15
68
28
64
16
3,451
230
2,147
659
14
63
30
58
20
3,220
63
-1
15
9
8
-12
11
-20
7
Equity capital and minority interest
Share capital
Share premium account
Reserve fund
Fair value reserve
Unrestricted equity capital fund
Own shares
Retained earnings
Shareholders’ interest in equity capital
29
33
25
3
24
0
69
183
29
33
25
10
24
0
56
178
0
0
0
-68
0
Minority interest in capital
Total equity capital
3
186
3
181
23
3
3,637
3,400
7
Total liabilities and equity capital
20
3
Bank of Åland Plc Year-end Report, January–December 2012 7
Summary income statement
Bank of Åland Group
Q4
2012
Q3
2012
%
Q4
2011
%
2012
2011
%
-3
20
12.1
8.3
-18
11
41.2
32.7
43.1
38.7
-4
-16
-100
70
86
10.1
10.8
0.0
14.5
1.2
110.4
1.9
-0.7
0.9
13.4
1.8
99.2
-100
8
-34
11
-18
-6
-20
49
-30
-14
-52.3
-20.6
1.5
-8.1
-14.5
-94.0
-60.0
-20.9
1.8
-6.7
-17.3
-103.1
-13
-2
-18
21
-16
-9
EUR M
Net interest income
Net commission income
Net income from securities transactions and
foreign exchange dealing
Net income from financial assets available for sale
Net income from investment properties
IT income
Other operating income
Total income
9.9
9.2
10.2
7.7
8.4
10.9
0.0
3.7
0.6
42.7
1.1
-0.6
0.0
3.5
0.1
22.0
-100
6
94
0.7
-1.3
0.8
2.2
0.3
23.0
Staff costs
Other administrative expenses
Production for own use
Depreciation/amortisation
Other operating expenses
Total expenses
-13.7
-5.4
0.3
-2.6
-3.8
-25.2
-12.3
-4.3
0.3
-2.0
-3.2
-21.5
11
24
10
34
21
17
-16.7
-5.8
0.4
-1.8
-5.5
-29.3
Profit before loan losses etc.
17.5
0.5
-6.3
16.4
-3.9
Impairment losses on loans and other
­commitments
Net operating profit
-3.1
14.5
-1.0
-0.5
-0.8
-7.1
-6.4
10.0
-1.8
-5.7
Income taxes
Profit for the period
0.6
15.1
0.3
-0.2
2.6
-4.5
-75
2.2
12.2
0.4
-5.3
Attributable to:
Non-controlling interests
Shareholders in Bank of Åland Plc
0.2
14.9
0.2
-0.3
0.2
-4.7
32
0.6
11.6
1.2
-6.5
Earnings per share
1.03
-0.02
0.80
-0.54
56
-0.34
-47
Bank of Åland Plc Year-end Report, January–December 2012 8
Summary statement of other
comprehensive income
Q4
2012
Q3
2012
Profit for the period
15.1
-0.2
Cash flow hedge
Assets available for sale
Valuation differences
Income tax on other comprehensive income
Other comprehensive income
-1.6
2.1
-6.7
-0.1
-6.3
1.1
-0.6
-0.3
0.3
Total comprehensive income for the period
8.8
0.1
Attributable to:
Non-controlling interests
Shareholders in Bank of Åland Plc
0.2
8.6
0.1
-0.1
Bank of Åland Group
%
Q4
2011
%
2012
2011
-4.5
12.2
-5.3
0.6
1.0
-0.2
1.5
-1.6
3.6
-8.1
-0.5
-6.5
0.7
-0.2
-0.2
0.3
5.6
-5.0
0.6
5.0
1.2
-6.2
%
EUR M
94
-49
-12
-3.1
73
0.2
-3.2
32
-47
Bank of Åland Plc Year-end Report, January–December 2012 9
Income statement by quarter
Bank of Åland Group
Q4 2012
Q3 2012
Q2 2012
Q1 2012
Q4 2011
EUR M
Net interest income
Net commission income
Net income from securities transactions and
foreign exchange dealing
Net income from financial assets available for sale
Net income from investment properties
IT income
Other operating income
Total income
9.9
9.2
10.2
7.7
9.6
7.6
11.5
8.0
12.1
8.3
8.4
10.9
0.0
3.7
0.6
42.7
1.1
-0.6
0.0
3.5
0.1
22.0
0.7
0.2
0.0
3.6
0.5
22.3
-0.2
0.2
0.0
3.7
0.1
23.3
0.7
-1.3
0.8
2.2
0.3
23.0
Staff costs
Other administrative expenses
Production for own use
Depreciation/amortisation
Other operating expenses
Total expenses
-13.7
-5.4
0.3
-2.6
-3.8
-25.2
-12.3
-4.3
0.3
-2.0
-3.2
-21.5
-13.0
-5.7
0.5
-1.8
-3.7
-23.7
-13.2
-5.2
0.4
-1.7
-3.8
-23.5
-16.7
-5.8
0.4
-1.8
-5.5
-29.3
Profit before loan losses etc.
17.5
0.5
-1.4
-0.2
-6.3
Impairment losses on loans and other commitments
Net operating profit
-3.1
14.5
-1.0
-0.5
-1.5
-3.0
-0.9
-1.1
-0.8
-7.1
Income taxes
Profit for the period
0.6
15.1
0.3
-0.2
0.9
-2.0
0.4
-0.7
2.6
-4.5
Attributable to:
Non-controlling interests
Shareholders in Bank of Åland Plc
0.2
14.9
0.2
-0.3
0.1
-2.2
0.1
-0.8
0.2
-4.7
Bank of Åland Plc Year-end Report, January–December 2012 10
Statement of changes in equity capital
Bank of Åland Group
EUR M
Equity capital,
Dec 31, 2010
Comprehensive
income
for the period
Dividend paid
Other changes in
equity capital
attributable to
minority interests
Share issue
Purchases of own
shares
Equity capital,
Dec 31, 2011
Comprehensive
income
for the period
Dividend paid
Purchases of own
shares
Other
Equity capital,
Dec 31, 2012
Noncontrolling
Unrestricted
Share
Cash
Fair
Shareholders’
interests’
Share
equity premium Reserve
flow Own value Translation Retained
portion of
portion of
capital capital fund account
fund hedge shares reserve difference earnings equity capital equity capital
23.3
0.0
5.8
24.5
29.1
24.5
33.3
33.3
25.1
25.1
0.0
0.0
0.0
-0.1
-0.1
-1.2
1.3
8.0
62.9
153.8
0.6
154.5
0.5
-0.2
-6.5
0.0
-6.2
0.0
1.2
-1.2
-5.0
-1.2
0.0
30.3
2.0
0.0
2.0
30.3
1.8
7.8
56.4
-0.1
177.9
0.0
2.6
-0.1
180.6
2.7
-8.1
11.6
0.0
5.0
0.0
0.6
0.0
5.6
0.0
0.5
68.4
-0.2
0.0
182.8
0.0
3.2
-0.2
0.0
186.0
-0.2
29.1
24.5
-0.5
32.8
25.1
-1.2
-0.2
Total
4.5
-0.3
Bank of Åland Plc Year-end Report, January–December 2012 11
Summary cash flow statement
Bank of Åland Group
Dec 31, 2012
Dec 31, 2011
10.0
16.5
-16.8
-2.3
-96.3
-5.7
15.7
-1.2
-3.5
-60.4
EUR M
Cash flow from operating activities
Net operating profit
Adjustment for net operating profit items not affecting cash flow
Gains/losses from investing activities
Income taxes paid
Changes in assets and liabilities in operating activities
-88.9
-54.9
Cash flow from investing activities
Cash flow from financing activities
Exchange rate differences in cash and cash equivalents
Change in cash and cash equivalents
2.3
144.8
2.8
60.9
-0.5
-66.8
0.7
-121.5
Cash and cash equivalents, January 1
Cash and cash equivalents, December 31
Change in cash and cash equivalents
184.7
245.6
60.9
306.2
184.7
-121.5
Bank of Åland Plc Year-end Report, January–December 2012 12
Notes to the consolidated interim report
1. Corporate information
The Bank of Åland Plc (Ålandsbanken Abp) is a Finnish public
limited company, organised in compliance with Finnish legislation
and with its Head Office in Mariehamn. The Bank of Åland Plc is a
commercial bank with a total of 18 offices. Through its subsidiary
Crosskey Banking Solutions Ab Ltd, the Bank of Åland Group is
also a supplier of modern banking computer systems for small and
medium-sized banks.
The Head Office of the Parent Company has the following registered address:
Bank of Åland Plc
Nygatan 2
AX-22100 Mariehamn. Åland
Finland
A copy of the consolidated financial statements can be obtained
from the Head Office or from the Internet website ­­www.alandsbanken.fi. The shares of the Bank of Åland Plc are traded on the
Nasdaq OMX Helsinki Oy (Helsinki Stock Exchange).
The consolidated financial statements for the financial year ending
December 31, 2012 were approved by the Board of Directors on
February 15, 2013 and will be submitted to the 2013 Annual General
Meeting for adoption. The Annual General Meeting has the opportunity to adopt or refrain from adopting the financial statements.
2. Basis for preparation and essential accounting
principles
BASIS FOR PREPARATION
The Interim Report for the period January 1–December 31, 2012
has been prepared in compliance with the International Financial
Reporting Standards (IFRSs) that have been adopted by the European Union (EU). The Year-end Report does not contain all information and notes required in annual financial statements and should
be read together with the consolidated financial statements for the
year ending December 31, 2011.
ESSENTIAL ACCOUNTING PRINCIPLES
The essential accounting principles used in preparing the Year-end
Report are the same as the essential accounting principles used in
preparing the financial statements for the year ending December
31, 2011.
3. Estimates and judgements
Preparation of financial statements in compliance with IFRSs
requires the Company’s Executive Team to make estimates and
judgements that affect the recognised amounts of assets and liabilities, income and expenses as well as disclosures about commitments. Although these estimates are based on the best knowledge
of the Executive Team on current events and measures, the actual
outcome may diverge from the estimates.
Bank of Åland Plc Year-end Report, January–December 2012 13
4. Capital adequacy
Bank of Åland Group
Dec 31, 2012
Dec 31, 2011
Tier 1 capital
Supplementary capital
Total capital base
152.9
73.3
226.2
145.5
75.3
220.7
Capital requirement for credit risks
Capital requirement for operational risks
Capital requirement for market risks
Total capital requirement
98.1
14.1
0.0
112.2
123.0
14.1
1.4
138.5
16.1
10.9
10.9
12.8
8.4
8.4
EUR M
Total capital ratio. %
Tier 1 capital ratio. %
Core Tier 1 capital ratio, %
On February 13, 2012, the Finnish Financial Supervisory Authority approved the Bank’s application to be allowed to calculate the capital requirement for credit risk according to the Internal Ratings Based (IRB) approach for the Finnish household portfolio. Comparative figures are calculated
according to the standardised approach. The calculation for the IRB approach did not apply the 80 per cent floor rule. Taking this transitional rule
into account, the total capital ratio was 14.6 per cent and the Tier 1 capital ratio 9.8 per cent.
Bank of Åland Group
Dec 31, 2012
Dec 31, 2011
Equity capital according to the balance sheet
186.0
186.6
Intangible assets
Property revaluation upon transition to IFRSs
Surplus value in pension liability according to IAS 19
Fair value reserve
Proposed dividends including subsidiaries
50% of expected losses according to IRB beyond those recognised
Deferred tax assets
Translation differences
Fair value, financial liabilities
Cash flow hedge
Core Tier 1 capital
-10.9
-7.8
-5.4
-4.5
-2.9
-3.2
-0.6
0.3
0.8
1.2
152.9
-12.0
-8.0
-5.1
-1.8
0.0
0.0
-0.8
-7.8
0.5
0.0
145.5
EUR M
Bank of Åland Plc Year-end Report, January–December 2012 14
5. Segment report
The Bank of Åland Group reports operating segments in compliance with IFRS 8, which means that operating segments reflect the information that
the Group’s Executive Team receives. In order to match the Bank of Åland’s internal reporting to the Group’s Executive Team, segment reporting in
the Year-end Report for the period January–December 2012 has been changed. The comparative period has been restated to correspond to the new
segment report.
The “Åland” business area includes office operations in Åland and equities trading operations in Mariehamn. The “Finnish Mainland” business area
includes office operations on the Finnish mainland, Ålandsbanken Asset Management Ab and equities trading operations on the Finnish mainland,
including Ålandsbanken Equities Research Ab (merged with the Bank on December 14, 2012). The “Sweden” business area includes the operating
units Ålandsbanken Abp (Finland) svensk filial (the Swedish branch of the Bank of Åland Plc), Ålandsbanken Asset Management AB (until its divestment on October 26, 2012) plus Ålandsbanken Fonder AB and Alpha Management Company S.A. The “Crosskey” business area includes Crosskey
Banking Solutions Ab and S-Crosskey Ab. “Corporate and eliminations” include all central corporate units in the Group, intra-Group eliminations and
the subsidiaries Ålandsbanken Fondbolag Ab and Ab Compass Card Oy Ltd.
The figures for 2011 have been restated in such a way that they are comparable with the figures in the 2012 segment report.
Bank of Åland Group
2012
EUR M
Åland
Finland
Sweden
Crosskey
Corporate and
eliminations
Total
Net interest income
Commission income
Other income
Nonrecurring income 1
Total income
11.8
6.7
0.6
1.0
20.0
17.3
13.4
0.3
0.0
31.0
11.3
11.1
1.0
12.9
36.3
-0.1
0.0
27.8
0.0
27.6
0.9
1.5
-7.1
0.0
-4.6
41.2
32.7
22.6
13.9
110.4
Staff costs
Other expenses
Internal allocation of expenses
Restructuring expenses
Total expenses
-4.1
-4.3
-7.4
-0.1
-15.8
-8.7
-7.7
-12.1
0.0
-28.4
-12.3
-7.0
-10.6
-0.6
-30.4
-13.6
-11.7
0.0
-0.4
-25.7
-12.5
-11.1
30.0
0.0
6.4
-51.2
-41.7
0.0
-1.1
-94.0
Profit before loan losses etc.
4.2
2.5
5.9
1.9
1.9
16.4
Impairment losses on loans and other
commitments
Net operating profit
-3.6
0.6
-2.7
-0.1
0.2
6.1
0.0
1.9
-0.4
1.4
-6.4
10.0
Income of EUR 13.8 M from divestment of the Swedish subsidiary, which had been emptied of operations; capital gain of EUR 1.0 M upon divestment of the associated
company Ålands Företagsbyrå and impairment losses of EUR 0.8 M on the Bank’s shareholding in Burgundy.
1
Bank of Åland Group
1
2011
EUR M
Åland
Finland
Sweden
Crosskey
Corporate and
eliminations
Total
Net interest income
Net commission income
Other income
Nonrecurring income 1
Total income
14.3
6.6
0.6
0.0
21.5
19.5
16.9
0.1
0.0
36.6
9.0
14.2
1.4
-1.1
23.6
0.0
0.0
31.2
0.0
31.2
0.2
1.1
-14.9
0.0
-13.6
43.1
38.7
18.5
-1.1
99.2
Staff costs
Other expenses
Internal allocation of expenses
Restructuring expenses
Total expenses
-4.1
-3.0
-9.0
0.0
-16.1
-9.3
-7.4
-15.0
-0.2
-31.8
-13.4
-9.9
-11.9
-5.2
-40.4
-13.8
-13.1
0.0
0.0
-26.9
-13.9
-9.5
35.9
-0.3
12.2
-54.5
-42.8
0.0
-5.7
-103.1
Profit before loan losses etc.
5.3
4.8
-16.9
4.2
-1.4
-3.9
Impairment losses on loans and other
commitments
Net operating profit
0.1
5.5
-2.4
2.4
0.2
-16.6
0.0
4.2
0.2
-1.2
-1.8
-5.7
Impairment loss of EUR 1.1 M on the Bank’s shareholding in Burgundy.
Bank of Åland Plc Year-end Report, January–December 2012 15
6. Managed assets
Bank of Åland Group
Dec 31, 2012
Dec 31, 2011
%
867
1,991
1,433
4,292
757
1,798
1,260
3,814
15
11
14
13
362
338
7
EUR M
Fund unit management
Discretionary asset management
Other asset management
Total managed assets
Of which own funds in discretionary and other asset management
7. Deposits from the public and public sector, including bonds and certificates of deposit issued
Bank of Åland Group
Dec 31, 2012
Dec 31, 2011
%
1,652
475
2,127
1,568
579
2,147
5
-18
0
186
134
320
189
208
397
-2
-35
-19
2,447
2,544
-4
EUR M
Deposit accounts from the public and public sector
Sight deposits
Time deposits
Total deposit accounts
Bonds and subordinated debentures 1
Certificates of deposit issued to the public 1
Total bonds and certificates of deposit
Total deposits
1
This item does not include debt securities subscribed by credit institutions.
Bank of Åland Plc Year-end Report, January–December 2012 16
8. Lending to the public and public sector by purpose
Bank of Åland Group
Dec 31, 2012
Dec 31, 2011
%
74
55
140
334
178
22
108
14
36
35
996
63
57
95
335
187
19
109
13
45
36
958
18
-4
48
0
-4
13
-1
9
-20
-3
4
1,251
309
126
202
1,889
1,161
294
126
177
1,757
8
5
0
14
7
21
21
22
22
-5
-5
2,906
2,737
6
EUR M
Companies
Shipping
Wholesale and retail trade
Housing operations
Other real estate operations
Financial and insurance operations
Hotel and restaurant operations
Other service operations
Agriculture, forestry and fishing
Construction
Other industry and crafts
Total, companies
Private individuals
Home loans
Securities and other investments
Business operations
Other household purposes
Total, households
Public sector and non-profit organisations
Total, public sector and non-profit organisations
Total lending
9. Impairment losses and doubtful receivables
Bank of Åland Group
Q4 2012
Q3 2012
%
Q4 2011
%
1.1
2.0
0.0
3.1
1.0
0.0
0.0
1.0
Dec 31, 2012
Sep 30, 2012
%
Dec 31, 2011
%
12.7
10.6
3.1
16.1
9.7
1.1
-21
9
12.5
7.7
1.1
2
38
-1.1
5.3
3.6
108
0.44
18.6
0.64
67
0.56
25.0
0.86
71
0.5
19.3
0.70
EUR M
Individual impairment losses
Group impairment losses
Reversals
Recognised in income statement
Gross doubtful receivables
Individual impairment losses
Group impairment losses
Net doubtful receivables
Level of provisions for doubtful receivables, %
Doubtful receivables as % of total
Of which > 90 days past due
Non-performing receivables as % of total
1.0
0.0
-0.1
0.8
-26
-4
Bank of Åland Plc Year-end Report, January–December 2012 17
10. Off-balance sheet commitments
Bank of Åland Group
Dec 31, 2012
Dec 31, 2011
%
15
69
88
195
367
19
90
80
188
377
-21
-23
10
4
-3
EUR M
Guarantees and pledges
Unutilised overdraft limits
Unutilised credit card limits
Other commitments
11. Restructuring reserve
Bank of Åland Group
Dec 31,
2012
New
reserve
Utilised
Withdrawn
Dec 31,
2011
1.0
0.1
0.0
1.1
0.6
0.1
0.0
0.7
-2.9
-0.5
-0.1
-3.4
-0.3
0.0
0.0
-0.4
3.6
0.5
0.1
4.2
EUR M
Staff costs
Rent
IT
Total
12. Goodwill
Bank of Åland Group
Dec 31, 2012
Dec 31, 2011
%
1.4
1.4
1.4
1.4
0
0
EUR M
Opening balance
Closing balance
13. Net interest income
Bank of Åland Group
Q4 2012
Q3 2012
%
Q4 2011
%
Credit institutions and central banks
The public and public sector entities
Debt securities
Other interest income
Total
0.3
17.4
1.1
0.1
18.9
0.3
19.3
1.7
0.3
21.5
16
-10
-36
-52
-12
0.6
20.8
2.0
0.6
24.0
-53
-16
-46
-79
-21
Interest expenses
Credit institutions and central banks
The public and public sector entities
Debt securities
Subordinated liabilities
Other interest expenses
Total
-1.5
-4.8
-2.0
-0.4
-0.3
-9.0
-1.4
-6.2
-2.8
-0.4
-0.5
-11.3
4
-21
-31
-1
-37
-20
-0.8
-6.3
-3.8
-0.5
-0.5
-11.9
83
-23
-49
-14
-40
-25
9.9
10.2
-3
12.1
-18
EUR M
Interest income
Net interest income
Bank of Åland Plc Year-end Report, January–December 2012 18
14. Commission income
Bank of Åland Group
Q4 2012
Q3 2012
%
Q4 2011
%
Deposits
Lending
Payment intermediation
Mutual fund commissions
Management commissions
Securities commissions
Other commissions
Total
0.2
0.7
2.0
2.8
2.3
2.6
0.5
11.1
0.2
0.6
1.8
2.2
1.7
2.0
0.6
9.2
-1
14
8
25
35
26
-4
20
0.2
0.1
1.8
2.1
2.2
3.2
0.5
10.3
6
8
32
4
-21
3
8
Commission expenses
-1.9
-1.6
23
-1.9
-2
Net commission income
9.2
7.7
20
8.3
11
Q4 2012
Q3 2011
%
Q4 2011
%
-0.7
1.4
0.6
-0.8
1.1
0.3
10
25
0.1
2.5
2.6
-46
-75
EUR M
15. Income taxes
Bank of Åland Group
EUR M
Taxes for the period and prior periods
Change in deferred tax assets/liabilities
Income taxes
16. Dividend
Bank of Åland Group
Dec 31, 2012
Dec 31, 2011
euro
Proposed dividend for 2012: EUR 0.15 per share
Final dividend for 2011: EUR 0.00 per share
2,163,023
0
Bank of Åland Plc Year-end Report, January–December 2012 19
17. Derivative contracts
Bank of Åland Group
EUR M
Value of underlying property
Interest rate derivatives
Forward contracts
Swap contracts
Option contracts
Purchased
Written
Currency derivatives
Forward contracts
Interest rate and currency swap contracts
Option contracts
Purchased
Written
Equity derivatives
Option contracts
Purchased
Other derivatives
Total
Dec 31, 2012
For hedging
purposes
Dec 31, 2011
Other
For hedging
purposes
Other
0
336
0
51
224
505
224
39
16
0
0
16
15
10
10
15
55
262
8
3
55
237
7
4
0
0
0
0
0
0
0
0
118
13
800
0
13
90
149
0
1,195
0
0
300
The equity derivatives that were purchased hedge option structures that are embedded in bonds issued to the public.
Bank of Åland Plc Year-end Report, January–December 2012 20
18. Maturity breakdown of claims and liabilities
Bank of Åland Group
EUR M
Dec 31, 2012
< 3 months
3 –12 months
1– 5 years
> 5 years
Not classified
by maturity
Total
Claims
Cash
Debt securities eligible for refinancing
with central banks
Claims on credit institutions
Claims on the public and public sector
entities
Debt securities
Shares and participations
Shares and participations in
associated companies
Derivative instruments
Intangible assets
Tangible assets
Other assets
Accrued income and prepayments
Deferred tax assets
Total claims
Liabilities
Liabilities to credit institutions
Liabilities to the public and public
sector entities
Debt securities issued
Derivative instruments
Other liabilities
Accrued expenses and prepaid
income
Subordinated liabilities
Deferred tax liabilities
Equity capital
Total liabilities
133
133
6
104
10
237
52
305
104
268
25
395
20
1,521
722
2,906
45
534
425
1,758
162
52
160
1,891
142
233
70
4
484
774
7
7
1
20
11
33
45
26
3
145
1
20
11
33
45
26
3
3,637
375
63
15
68
28
4
2,195
360
24
672
37
99
16
186
311
2,127
760
15
68
28
64
16
186
3,637
Bank of Åland Plc Year-end Report, January–December 2012 21
Bank of Åland Group
EUR M
Claims
Cash
Debt securities eligible for refinancing
with central banks
Claims on credit institutions
Claims on the public and public sector
entities
Debt securities
Shares and participations
Shares and participations in
associated companies
Derivative instruments
Intangible assets
Tangible assets
Other assets
Accrued income and prepayments
Deferred tax assets
Total claims
Liabilities
Liabilities to credit institutions
Liabilities to the public and public
sector entities
Debt securities issued
Derivative instruments
Other liabilities
Accrued expenses and prepaid
income
Subordinated liabilities
Deferred tax liabilities
Equity capital
Total liabilities
Dec 31, 2011
< 3 months
3 –12 months
1– 5 years
> 5 years
Not classified
by maturity
66
Total
66
9
129
57
41
18
125
129
350
71
333
92
1,207
35
847
3
2,737
198
3
1
20
11
32
46
26
4
145
1
20
11
32
46
26
4
3,400
626
482
1,282
200
1,790
163
284
402
18
91
865
30
230
0
2
2,147
659
14
63
14
63
30
5
2,153
692
34
143
18
51
20
181
362
30
58
20
181
3,400
Bank of Åland Plc Year-end Report, January–December 2012 22
19. Interest rate refixing periods
Bank of Åland Group
EUR M
Assets
Liabilities
Difference between assets
and liabilities
Dec 31, 2012
< 3 months
3–6 months
6–12 months
1–5 years
> 5 years
Total
2,435
2,721
343
223
390
200
556
458
81
55
3,806
3,657
-286
120
190
99
26
149
< 3 months
3–6 months
6–12 months
1–5 years
> 5 years
Total
2,721
2,727
410
420
396
294
463
400
59
67
4,050
3,909
-5
-10
101
63
-8
141
Bank of Åland Group
EUR M
Assets
Liabilities
Difference between assets
and liabilities
Dec 31, 2011
Shows the Bank’s interest rate-related assets and liabilities, including derivatives at underlying value, according to the interest rate refixing date.
20. Hours worked, recalculated to full-time equivalent positions Bank of Åland Group
Q4 2012
Q3 2012
%
Q4 2011
%
381
199
0
26
12
5
3
0
387
199
0
25
13
6
3
0
-2
0
0
12
-8
-100
4
-8
-17
0
0
340
217
94
24
12
6
4
-100
626
633
-1
697
-10
Bank of Åland Plc
Crosskey Banking Solutions Ab Ltd
Ålandsbanken Sverige AB
Ålandsbanken Asset Management Ab
Ab Compass Card Oy Ltd
Ålandsbanken Fondbolag Ab
Ålandsbanken Fonder AB
Ålandsbanken Equities Research Ab
Total number of positions, recalculated
from hours worked
8
0
-17
From December 1, 2011, most of the operations of Ålandsbanken Sverige AB were transferred to Ålandsbanken Abp (Finland) svensk filial, the Swedish branch of Bank of Åland Plc. This means that hours worked in the branch are reported as part of Bank of Åland Plc.
21. Assets pledged for covered bonds
Bank of Åland Group
Dec 31, 2012
Sept 30, 2012
665
665
533
533
% Dec 31,2011
%
EUR M
Assets pledged for covered bonds
Total
25
25
0
0
Bank of Åland Plc Year-end Report, January–December 2012 23